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Tuesday, December 5, 2023

Private banks await stable policies before granting moratoriums – The Morning

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  • Urge clear Government policies in order to make decision

By Imesh Ranasinghe 

Local commercial banks need stable policies from the Government to provide further moratoriums to Sri Lanka’s crisis-hit sectors, The Morning Business learnt.

A senior official from a leading private commercial bank said that there should be clarity from the regulator (the Central Bank of Sri Lanka [CBSL]) and the Government, which drives the economy, for the banking sector to decide on a course of action in this regard.

The official said that based on those plans, the banks could decide on the moratoriums, how long they are going to be given, the conditions, and the basis of their provision.

Also, the banker said that the sector needs to study each industry and the recovery of each sector depending on the Government’s plans for the economy to decide on the duration of any potential moratoriums.

“We need to look very strongly, what we are going to do in the short to medium term,” the official said, adding that there are several factors impacting each sector. “What is going to be important is for us to have a clear understanding as a banking sector, to find out how those factors are going to evolve in the short, medium and long term.”

Officials from other commercial banks who spoke to The Morning Business echoed similar sentiments, noting that they were all looking towards the policies set by the Government and the CBSL with regard to granting moratoriums.

The CBSL provided debt moratoriums to businesses impacted by the Covid-19 pandemic, which ended on 31 December 2021; however, the moratorium provided to the tourism Industry was extended to 30 June 2022, and Cabinet approved a proposal submitted earlier this month to extend it further until 31 December 2022, to which CBSL is yet to provide an official confirmation as the regulator.

Moreover, Prime Minister Ranil Wickremesinghe told Parliament last week that the CBSL is currently assessing which parties deserve support on their loans, and will write off agricultural loans of small-scale farmers.

Further, the banks also want independent bodies to make sure policy paradigms by the Government are maintained in the medium to long term, as policies tend to change with the government in power.

“A moratorium is not something alien; it is something to do with the entire policy package and the entire strategy of the country,” the banker said, adding that there needs to be a concrete plan, as the moratoriums cannot be granted just for the sake of providing relief, and will entail a continuous process with a feasible recovery plan in place.

Prime Minister Ranil Wickremesinghe on Wednesday (15) met with representatives of commercial banks to discuss the loans requested by rice mill owners, according to a media release from the Prime Minister’s Media Division.

The Prime Minister was informed by Minister of Trade, Commerce and Food Security Nalin Fernando, that while the banks were not dispersing the requested loans sufficiently, there was also hoarding of rice stocks taking place.

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